2. R
Q
A
p
Agglomeration Economies
The term Agglomeration Economies is used in urban economies to
describe the benefits that firms/industries obtain when locating near
each other.
3. Industrial Agglomeration
It refers to high concentration of industrial activities in an area.
When a specialized industry is established in any area it builds up a body
of trained workers, and this tends to attract to the area industries of
identical type or of subsidiary type.
The subsidiary industries may likewise attract another type of major
industry.
The resulting growth of population itself then attract diverse and lighter
type of industries and a snowball-like of population and industry occurs.
With the growth of population, improvement in transportation, in
education and in professional services follows, and all rendering
conditions yet more attractive for further increase in population and
industry.
It often occurs that the establishment of an industrial center may owe its
existence to some special advantage of the site, such as the existence
of coal, or iron, or a port, or nearness to a market, have been major
determining factors in the selection of sites for many existing industries.
4. 2 forms of Agglomeration2 forms of Agglomeration
Concentration of related or well-linked factories together and form a
specialized industrial region.
Concentration of various kinds of factories in the industrial zones in urban
area.
Industrial districts
•Hong Kong - Kwun Tong, Tai Kok Tsui, Tai Po Industrial Estate
•Sydney - Paramatta, Alexandria, etc
Industrial cities
•Shanghai (textile)
•Nagoya/Toyota (car-making)
•Detroit (car-making)
Industrial regions
•Silicon Valley in California (electronics)
•around Inland Sea of Japan (ship building)
•PRD in South China (toy)
ExamplesExamples
5. Characteristics of an Industrial Agglomeration
Clustering of industrial activities
Functional linkages production linkages + service linkages
Production Linkages: When materials move from one firm to another
Service Linkages : As the firms share the specialized services and facilities
Economies of scale
Q
C1
Q1
Cost
C
Output
Average Cost Curve
6. AdvantagesAdvantages
Concentration of industry have certain economic advantages. The
finished product of one industry is often the raw material of another
industry.
If the workers are kept in the same neighborhood, transport costs for the
movement of manufactured products from subsidiary factory to the
main factory are kept low.
The concentration of work- people having specialized skill and training is
advantageous to the employer.
Grouping of similar industries thus tends towards industrial activity, which
attracts partly dependent lighter industries, and these in turn other and
different industries.
The concentration of diversified industries is advantageous to the
workers, because there is a choice of occupation to suit different tastes,
and also if one trade goes slack they may be able to obtain work in
another.
The light industries can frequently take a large percentage of unskilled
operative.
7. DisadvantagesDisadvantages
Grouping of like industries has disadvantageous to the employees.
Demand for goods rises and falls, and when in falls in specialized areas
unemployment results.
A permanent change of public demand, e.g. for rayon instead of
cotton, for electric motors instead of steam engine, may be disastrous
for specialized industrial area. Both workers and employers will suffer and
the community which serves them will also suffer.
Concentration of industries in large cities almost inevitably suffer
economically as a result of street traffic congestion.
The growth of city results in a rise of land values.
When concentration of industry occurs in an underdeveloped area,
industries will demand to the public authorities to supply roads, water
supply, electricity, gas, sewerage, schools, workers housing, other
community facilities etc. which become a great burden for the
community.
Concentration of industry may result adverse effect on the health of
workers caused by the congestion of houses, over crowding within the
houses. The pouring out of vast volume of smoke, dust and noise may
cause adverse effect on environment.
8. How is Industrial Agglomeration Developed?
A case of Quarry Bay, Hong Kong
9. Quarry Bay
Tai Koo Sugar Refinery was
established in 1883
With growing trade in raw cane
sugar from Java, the Philippines
and North Queensland, and
ready markets in China and
Japan, Taikoo Sugar ran the
world's largest sugar plant in its
day, and owned small fleet of
sugar carrying ships.
10. What were the original factors and attraction for the
sugar factory?
Available of land
Coastal location
Sheltered location
Availability of labor
11. The Problem & Solution
More than 3,000 workers were needed but the population was only
3,274
Hostels were provided and so workers from other places were
attracted
More jobs mean more income. It in turns increased the purchasing
power of people
Other related facilities were provided, e.g. clinic, school
12. Tai Koo Dockyard
in 1900, on land adjacent to
the sugar refinery,
construction work began on
Taikoo Dockyard.
Taikoo Dockyard launched its
first riverboat in 1910, soon
began to produce coasters
for the company.
The dockyard was to become
one of Hong Kong's biggest,
and also one of its most
progressive employers,
providing its own housing,
hospital and school.
13. • Quarry Bay was still an important industrial district in 1970s and 1980s
• Factories included soft-drinks factory (7-up), Printing (Kodak), car
repair centre, various electronics industries.
• The growing population supported the industries which become more
profitable and enjoyed the benefits from agglomeration
• The whole process is cumulative and growth becomes self-sustaining.
14. 3 Types of Industrial Linkages
VerticalVertical (one-to-one) linkage - forward and backward linkage
HorizontalHorizontal (many-to-one) linkage
DiagonalDiagonal (one-to-many) linkage
18. Industrial Site Planning StandardsIndustrial Site Planning Standards
Size Range 100-500 acres
Average 300 acres
Minimum Size 35 acres
Floor Area Ratio (F.A.R) 0.1-0.3
Employee Density (overall) 10-30 per acre
Intensive Industry 30 person per acre
Intermediate Industry 14 person per acre
Extensive Industry 8 person per acre
Gross Land Required for Industry 12 acres/1000 population
Land Required for Light Industry 2 acres/1000 population
Land Required for Heavy Industry 10 acres/1000 population
Source: Lynch and Hack (1984:306-311 and 468) and Urban Land Institute (1975:167-168)
19. According to BNBC, 2006 (Chapter: 1.5.5.6) – The minimum size of an
industrial plot should be 300 m 2
and its road frontage width should not
be less than 15 m.
Table: Percentage of Land Use for Bangladesh and India
Land use
Category
Bangladesh India
Small Medium Large
Residential 30-40 45-50 35-40 35-40
Commercial 5 2-3 4-5 4-5
Industrial 2-10 8-10 10-12 12-14
